October 2016 Advisory Commentary

With the markets ending the month and quarter on a positive note, September also saw the emergence of several economic indicators flashing slower growth signals, with some downright negative trends showing up in the data as well. We’re now beginning to see across the board reductions in GDP growth estimates from both private and public forecasters.

The U.S. Federal Reserve is still working inside a very small, very claustrophobic box of options. They, along with ourselves, believe that interest rates should be at a much more normal level given how far we are from the last economic downturn. The question is now emerging, on an official scale, of what does the Fed do if the economy’s progress is not sufficient enough to handle those higher rates?

Janet Yellen, the chairman of the Federal Reserve Board, suggested that the Fed could look at purchasing shares of individual companies, or the broader indexes, in order to support the economy. One now has to openly wonder if the people running this institution have ever even breezed casually over the economic history of the modern world? The idea of the central bank of the United States of America, the most free-market and capitalist nation in human history, buying an ownership and voting stake in private American companies is one of the most abhorrent economic ideas we can think of. But, then again, with what we’ve seen our institutions do over the past nine years, who would really be that surprised?

It truly is a sign of how poorly the previous actions have worked, that they are now openly considering this type of economic gambit. One can only guess how the story would ultimately unfold, but we know that it will end badly.

Remember, the first rule of getting yourself out of a hole is to STOP DIGGING!

Brian Weckman, RFC
Chief Investment Officer
Actis Wealth Management L.C.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The economic forecasts may not develop as predicted and there can be no guarantee that strategies promoted will be successful.